Markets await Theresa May’s statement; US economic data delayed

Pound - GBP 

Brexit back in the spotlight 

The Pound was able to climb during many of last week’s sessions as optimism that a no-deal Brexit could be avoided swept through the market. Sterling strength prevailed despite Theresa May experiencing a historic defeat in parliament over her Brexit deal. It’s going to be an interesting week ahead for the Pound, with Theresa May set to start the week offering a statement to parliament on Monday as part of the three-day deadline politicians recently put in place. Her speech could underline any positive cross-party developments but could also indicate whether the UK looks to be on the road to a general election in a bid to break the stalemate. Politics will likely be Sterling’s key driver in the weeks ahead, especially with votes expected to take place on a number of Brexit-related topics on January 29th. Tuesday could be another day with volatility as the UK’s latest employment data comes to light.

Euro - EUR

German growth slumps

Last week it was revealed German growth hit a five-year low in 2018, signifying it was likely a technical recession was narrowly avoided in the second half of the year. Economists will be watching economic indicators closely following the European Central Bank’s (ECB) decision to end its stimulus programme. Tuesday will release the latest ZEW sentiment figures for both Germany and the Eurozone, which could inspire Euro exchange rate movement. Eurozone Consumer Confidence data will be out on Wednesday, but investors will be keen to see what the ECB has to say about monetary policy in its Thursday meeting.

US Dollar - USD 

US government shutdown continues 

The US Dollar was able to gain against several currencies towards the end of last week on political progress with China; USD/EUR was offered some additional support after the Euro softened on weaker domestic data. With around 800,000 US federal workers not receiving paychecks due to the partial government shutdown, it’s likely some of the impact will be shown in upcoming ecostats. However, a plethora of figures could be delayed as a result of the shutdown, including Durable Goods Orders, Factory Orders, and New Home Sales readings. Meanwhile, US President Donald Trump suggested that he thought a trade deal with China over trade could happen, but denied that he was considering lifting tariffs. 

Australian Dollar - AUD 

Australian employment figures ahead 

The Australian Dollar was relatively unfazed on Monday after news that Australia’s largest trading partner, China, had recorded its lowest growth in almost 30 years. However, last week the Aussie had experienced some declines when Chinese exports slumped, and global slowdown fears rose. Any further indications of a global slowdown or more disappointing data from China could put pressure on the Aussie. Thursday could be an exciting day for the AUD exchange rate when the latest Australian labour market figures are released.

New Zealand Dollar - NZD

Inflation data in focus 

New Zealand House Sales data dropped to a seven-year low last week, falling by -12.9% in December which pressured the Kiwi Dollar lower. The week ahead has several pieces of high and medium-tier data due for release, meaning the NZD exchange rate could experience some significant fluctuations. Tuesday will see the release of the New Zealand inflation number for the fourth quarter of 2018, while Thursday will detail the levels of credit card spending. The inflation number will be of particular significance, as a weaker reading could prompt the Reserve Bank of New Zealand (RBNZ) to make a cut to interest rates.

Canadian Dollar - CAD

Canadian data thin on the ground 

Positive sentiment in the US-China trade tensions spurred oil prices and the Canadian Dollar towards the end of last week. Canada’s latest inflation reading also showed a jump last week, from 1.7% to 2.0% in December, despite expectations for consumer prices to stagnate. It’s a quiet week ahead for Canadian data, with the only figure of note coming in the form of Retail Sales on Wednesday. Markets will look to other influences such as geopolitical developments and the cost of oil for Canadian Dollar movement while data is thin on the ground.